Penske Automotive Group (PAG.N) subsidiary Smart USA said on Wednesday that it will begin selling a subcompact car in the United States in late 2011, the first vehicle for the U.S. market under an expanded Daimler AG (DAIGn.DE) and Nissan Motor Co Ltd (7201.T) partnership.
Penske, in a filing with U.S. regulators, said development, engineering and tooling costs to bring the five-door hatchback to Smart's U.S. dealership network will cost $25 million. About $1.5 million of that cost will be in the just-completed third quarter's expenses.
The Smart hatchback will give dealers a larger vehicle to sell than the Daimler-made Smart Fortwo micro car that has struggled in the past two years after a brisk sales start when it was introduced to the U.S. market in 2008 amid rising gasoline prices.
"There were a lot of customer requests to offer a little bit larger vehicle," Smart USA President Jill Lajdziak said in an interview. "We're meeting the needs for what the consumer asked."
The new vehicle will compete with Honda Motor Co's (7267.T) Fit in the growing subcompact vehicle segment, Lajdziak said. Sales of the as yet unnamed car will begin in the fourth quarter of 2011.
Penske, based in suburban Detroit, is the exclusive U.S. distributor for Smart and the No. 2 U.S. auto dealership group. Penske reported a loss on the Smart distribution unit in the first half of the 2010.
Penske has 173 franchises in 17 states and another 152 outside the United States, mainly in Britain.
Penske has 75 Smart stores in the United States and Puerto Rico.
Through September, U.S. 2010 sales of the Fortwo were down 61.5 percent in 2010, to 4,779 vehicles.
The new car will be built on a new global platform in one of Nissan's two plants in Mexico.
